Chairman defends stadium profit predictions

John Hansen.
John Hansen.
The chairman of the company running Dunedin's troubled Forsyth Barr Stadium, Sir John Hansen, has been forced to defend ''optimistic'' predictions of profit, as the company eyes a possible six-figure drop in revenue next year.

Dunedin Mayor Dave Cull yesterday confirmed the council was concerned by the potential for a drop in revenue at the stadium totalling ''several hundred thousand dollars'' in 2014-15.

That was because of the scheduling of a midwinter All Blacks rugby test at the stadium, earlier than expected, leaving the venue without a major income-earner booked for 2014-15, he said.

The drop in expected revenue, as well as concerns about the fundamental flaws in the stadium operation, had prompted last week's announcement of a review by council chief executive Dr Sue Bidrose, he said.

However, with updated budget details not due to be presented to the council until next month, continuing uncertainty was also part of the problem, he said.

''That's the concern but because we don't have any certainty, we don't know ... we are talking about hundreds of thousands of dollars when we don't get a major event.''

Sir John, contacted yesterday, would not confirm the size of the likely losses expected until after the budget details were reviewed at a board meeting on Friday.

Dave Cull.
Dave Cull.
He would only say the small profit projected for the 2014-15 year would now ''no longer be the case''.

''It would be wrong of me to put figures on it before the board meeting, but it is quite clear that the following year will be a very challenging one.''

However, he defended a rosier assessment of the company's financial performance, given in October last year, which suggested the stadium had turned a financial corner.

At the time, DVML's then-chief executive, Darren Burden, said prospects for better financial results were looking ''reasonably good'', after DVML turned a $3.21 million loss in 2011-12 into a $986,000 loss in 2012-13.

The company's statement of intent predicted a $98,000 loss for 2013-14, followed by a small profit of $10,000 in 2014-15.

''It would be foolhardy of me to paint the ultimate positive picture, but what I can say is we've got some confidence now that everything is heading in the right direction,'' Mr Burden said at the time.

Asked about the comments yesterday, Sir John said they were not misleading ''at all''.

''Obviously, that's what Darren thought, that we were heading in the right direction. I would put it differently. I would put it that they were improving, but the fundamental flaws in the model remain,'' Sir John said.

Part of the problem was the announcement in December - after Mr Burden's comments - that the stadium would host an All Blacks versus England rugby test on June 14, Sir John said.

That was earlier than expected, as it had been assumed the stadium would host a test later in 2014, placing profits from the event in the 2014-15 year, he said.

DVML had cut costs by 10%, while improving revenues by 23%, in 2012-13, but Sir John said ''fundamental difficulties'' remained.

They included using $4 million of DVML's revenue to help cover stadium debt, as well as continuing difficulties attracting large concerts, he said.

''Things were improving ... but the fundamental difficulties remained. I just think the city, with a new CEO, have decided we need to address those fundamental difficulties, and I'm all in favour of that.''

Mr Cull said the earlier comments had proven to be ''very optimistic'', but that was with the benefit of hindsight.

Dr Bidrose said she was yet to receive final budget figures from DVML, and referred questions about the figures to Sir John.

She expected the updated figures would be presented to the council next month, in time to be included in the council's 2014-15 budget process.

chris.morris@odt.co.nz

Correction

Thanks Russandbev, I stand corrected. Rice is twice as nice.

The fundamental difficulties of paying your way

If by "..we need to address those fundamental difficulties" you mean removing the $4 million rent which services the stadium debt and pretending you are then making a profit, you have got to be joking. You do realise that it is still a stadium cost and will still have to be paid by somebody even if you remove it from the ledger and that a "profit" is not actually a profit if you only count the numbers with a plus sign before them. Do you?

Easy solution

If the good Judge believes his prediction, let him make up any shortfall from his own pocket.

The smartest guys in the room ...

Clearly there are a few in Dunedin (and NZ?) who are ready to shaft the rest of us for no other reason that they believe they are 'the smartest guys in the room' despite clear evidence to the contrary. 

Wrong lady of the night

At the risk of being pedantic, it was actually Mandy Rice-Davies that uttered "He would, wouldn't he" when it was put to her in court that Lord Astor had denied having sex with her.  Interesting to note that a barrister and a Tory MP in the court that day who was taking notes claimed that he never heard it, to which she said: "The palest ink is not always better than the best of memory, Sir Ivan – besides I have before me the court transcript.”

Quite clear for a very young lady at the time she had a quick wit and doesn't seem to have lost it. 

Sir John says..

Asked about the comments yesterday, Sir John said they were not misleading ''at all''.

As Christine Keeler so famously said, 'Well, he would say that wouldn't he?"

Not a solid plan

Frankly any business plan that falls apart because money comes in a month early is not well thought out. Contingency planning needs to be a part of any sensible plan - this is why you need to plan to make a larger profit than you need to to make sure you cover your unexpected losses. In the real world of course you have an awful lot more unexpected losses than unexpected profits. If you can't make a profit from your rugby stadium from normally scheduled games you're not charging enough for them.

As for $4m in in rent being a burden, Mr Hansen forgets that if he were running an actual commercial enterprise he would be required to cover all the financing of the venue he was hiring, not just a small fraction of the interest and none of the principal, as it is this is a far smaller burden that the portion which is coming out of the ratepayers' pockets - his solution would appear to stop DVML from having to pay it and to get the ratepayers to pay more.

Perhaps it's time we had a board running the stadium of people who actually live in Dunedin and care as much about the city as they do about the rugby stadium.

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